The auditor's first course of action when an illegal act is uncovered should be to immediately notify the appropriate authorities, including but not limited to, law enforcement and the Securities and Exchange Commission.

Question

Quizplus · Accepted Answer

When an auditor uncovers an illegal act, their first course of action should be to discuss the matter with an appropriate level of management and, when appropriate, those charged with governance, to determine the effect of the act on the financial statements and to consider the need for disclosure. Notifying authorities is not the immediate first step without first going through internal channels and assessing the situation according to auditing standards and the legal counsel's advice.

The Auditor's First Course of Action When an Illegal Act